Tuesday, January 7, 2014

Top three ways Supreme Court could avoid school finance showdown

LAWRENCE, KAN. ----- One week out from the start of the legislative session, and everyone is still waiting with bated breath for the Kansas Supreme Court to rule in the school finance case.

Which leaves pundits and gadflies little else to do for the time being than to sit around and speculate about what will happen, and then what will happen next.

The conventional wisdom currently takes two forms: a slam-dunk win for the plaintiffs, with an order to increase funding by hundreds of millions of dollars, leading to a constitutional showdown between the court and the Legislature; or a slam-dunk win for the state, overturning the court's previous ruling in Montoy vs. Kansas (2005), and holding that the court has no authority to question the political judgment of the Legislature regarding appropriations.

The latter, of course, seems to be little more than a pipe dream even among conservatives who take that view. Judging by conservative blogs, and the very nature of the latest Kansas Policy Institute public opinion poll, even they are bracing themselves for an adverse decision, and are girding themselves for the constitutional battle to follow.

But let me suggest there are at least three ways the court could conceivably rule that would avoid the whole showdown between the legislative and judicial branches and thereby leave both sides a little disappointed. First, however, a little review about how we got here:

In Montoy, the Court said that for funding to be constitutional, the Legislature must consider two factors: the actual cost of providing an education, including reasonable administrative costs; and the equity with which those funds are distributed. Adequacy and equity.

The equity piece applies not just to the base funding the state gives to school districts, but also to other parts of school budgets that the Legislature has authorized, namely Local Option Budgets, or LOBs, and capital outlay budgets.

Both of those are somewhat discretionary funds, and it's up to each local school board to decide how much it needs. But in property-rich districts like those in Johnson County, it takes a much smaller mill levy to raise any given amount of money than it does in poorer districts. Thus, the Legislature provides "equalization aid" to subsidize those budgets for poorer districts, so that 1 mill of property tax in Galena, or even Kansas City, yields roughly the same amount of revenue as 1 mill in Olathe or Blue Valley .

In the current case, Gannon vs. Kansas, the plaintiffs argued -— and the trial court agreed — that since 2008-2009, the Legislature has walked away from both of those commitments, slashing base state aid without any regard for the actual costs of running schools, and failing to fully fund the equalization formulas. The LOB formula is now only partially funded, and the capital outlay formula has gone completely unfunded for years.

So how can the court untie this knot without bringing down the wrath of a vengeful governor and Legislature? (Think constitutional amendments; changing the way Supreme Court justices are selected; lowering the mandatory retirement age for justices to force a few of them out to pasture; messing with their pension plans ... etc.) Here are some possibilities:

• Dismiss for lack of standing: This was an argument Solicitor General Steve McAllister raised during oral arguments. He said the plaintiffs made a huge procedural mistake by failing to put anything in the record about who the named plaintiffs, Luke Gannon et al., even are, let lone how they individually have been harmed by the alleged constitutional violation. At most, this would be a delay move by the court because it would just force the plaintiffs to refile the case, take a few depositions by those plaintiffs and go through the whole lengthy, and costly, process again, leading in all likelihood to the same result anyway. However, it does seem that if a majority of justices wanted to take that route, they would have done it already. It wouldn't take three months to write that opinion.

• Uphold on equity; punt the rest: The equity issue is really the least defensible for the state. The equalization formulas still exist in statute, suggesting the Legislature still acknowledges they are necessary. It just hasn't funded them, and it really has provided no plausible rationale for that, other than saying it just doesn't want to. If the court acts only on that issue, it would be hard for others to argue that the justices are "legislating from the bench." The Legislature enacted those formulas; the court has previously upheld them as constitutional. According to the Kansas State Department of Education, fully funding the LOB equalization would cost $103.9 million next year. Capital outlay equalization would be in the range of $25 million. That's still a chunk of change, but less than the full package and a little more defensible politically. That would leave only the big-ticket item of base state aid unresolved, to wit:

• Remand for a new cost study: In Montoy, the Court used two different cost studies that the Legislature itself commissioned to come up with a base funding level that lawmakers eventually adopted. That's what led to the statute that is still in place saying base state aid today should be $4,492 per pupil, instead of the $3,838 the state is actually funding.

At the Gannon trial during the summer of 2012, however, the plaintiffs relied on one expert witness to update those cost studies, and it was a witness who wasn't involved in either of the original reports. They also presented school officials from plaintiff districts who testified that costs have gone up and current funding was inadequate, but not by how much. The state, for its part, offered no alternative evidence to suggest that $3,838 is an adequate figure, other than the self-evident fact that schools seem to be getting by with it anyway, so what the heck.

One conceivable middle path out of that problem would be to demand new evidence. Remand the case — either back to the trial court, or to the Legislature itself — and tell both sides to put new, current cost estimates into the record and come up with a new figure that is supported by evidence.

That, in essence, is what the court really did in Montoy, a case that was heard by the Supreme Court, in one form or another, five times before it was finally dismissed in 2006 — and then a sixth time in 2010 when the court refused to reopen it.